Extension of Malaysia lockdown hurts biomass output

Spanish Market: Biomass, Electricity
25/03/20

Malaysia today extended a countrywide lockdown by two weeks to 14 April to combat the spread of the coronavirus, a move expected to keep wood pellet factories closed for nearly a month.

The restrictions on movement are also making it more difficult for many palm kernel shells (PKS) suppliers to operate. The Malaysian state government of Sabah imposed the strictest measures on the palm oil industry by today imposing a lockdown on plantations during 25-31 March and on mills for 27-31 March.

The national government initially imposed a shutdown of non-essential businesses for 18-31 March but the order has been extended as there are 1,796 confirmed cases of coronavirus in Malaysia, the highest in southeast Asia. The shutdown order initially included palm oil mills and plantations, but they managed to successfully appeal against this order. But Sabah's government said today it was closing palm oil estates and mills across the districts of Tawau, Lahad Datu and Kinabatangan until at least the end of this month to curb the movement of palm oil workers after some farm workers tested positive for the virus.

At least one PKS market participant said today it had to declare force majeure on a PKS cargo in Sabah that it cannot load, even though it had a full cargo ready. Another PKS supplier elsewhere in Malaysia said it has been unable to load a PKS cargo this week, as the restrictions on movement has upset logistics and made it hard to find workers to screen and operate stocks and move cargoes.

Sabah is Malaysia's largest palm oil producer, accounting for 25pc of Malaysia's 19.9mn t of crude palm oil production in 2019. Malaysia is also the second-largest exporter of wood pellets and PKS in Asia after Indonesia. Malaysia exported 707,000t of PKS in 2019, up by 88pc from a year earlier, with most sold to utilities in Japan. Malaysia also exported 615,000t of wood pellets in 2019, down by 13pc from 2018.

PKS supplies in Indonesia and Malaysia are already tight because of the current low production of fresh fruit bunches. This pushed the spot east coast Sumatra Indonesian PKS price up above $100/t last week for the first time since Argus began the assessment in May 2017. Argus assessed the price at $101.42/t on 18 March, an 11pc increase since the start of this year.

Buyers in South Korea and Japan still need biomass for their power plants. South Korean buyers of wood pellets have said they will try to reschedule cargoes with suppliers, although they had not expected Malaysia's wood pellet factories to be closed until as late as 14 April.

Raw material shortages have already tightened supplies of wood pellets from Vietnam and Malaysia, as a result of China's reduced demand for furniture and wood products following the outbreak of the coronavirus. Fob Vietnam wood prices edged up over the previous week to close at $98.95/t on 18 March.

The coronavirus outbreak is spreading in southeast Asia, with Thailand yesterday declaring a one-month state of emergency. Thailand was the second-largest consumer of PKS in 2019, importing 587,693t from Indonesia, according to customs data. Cases are also rising in Indonesia, which is a major exporter of LNG, coal, palm oil, PKS and other commodities, while it is a minor exporter of wood pellets.

By Claire Pickard-Cambridge, Lauren Moffitt and Sam Hong

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18/12/24

UK government underlines its commitment to net zero

London, 18 December (Argus) — The UK government has re-emphasised its commitment to the country's legally binding target of net zero emissions by 2050, and says it is acting either fully or partially on all recent recommendations from the independent advisory Climate Change Committee (CCC). The CCC in July found that "urgent action" was needed if the UK was to hit its climate goals — but it was based on the previous Conservative administration's policy. The current Labour government had taken power just two weeks previously. "The inheritance of this government was that we were not on course to rise to the climate challenge or seize the opportunities of action", the government said this week. It set out in detail its action so far on a variety of issues — including renewable power, sustainable transport, domestic heating and biodiversity — as well as future plans. The government will in 2025 publish an update on its plans for "fully delivering" the fourth, fifth and sixth carbon budgets, it said. Carbon budgets are legally binding and place a restriction on UK greenhouse gas (GHG) emissions over a five-year period. Carbon budgets 4-6 cover the timeframe 2023-37. It will also set the seventh carbon budget — which covers the period 2038-42 — by June 2026, alongside a strategy "setting out the next phase of our pathway to net zero". The UK has cut GHG emissions by 53pc between 1990 and 2023, provisional data show. It met its first three carbon budgets, which collectively covered 2008-2022. The government has taken several steps since winning the July election, including lifting the de facto onshore wind ban, approving renewables projects and awarding the first permit for carbon transport and storage . It has also slightly watered down its pledge of "clean power" by 2030, to 95pc from 100pc, although it also provided clarity around reaching the target in an action plan released last week. And UK prime minister Keir Starmer last month unveiled an ambitious GHG reduction goal at the UN Cop 29 climate summit. The UK has a headline goal of cutting GHGs by 81pc by 2035, from 1990 levels, and will set out its plan to achieve that "in the coming months", the government said this week. By Georgia Gratton Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Erex delays starting wood pellet production in Vietnam

16/12/24

Erex delays starting wood pellet production in Vietnam

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Argentina’s renewables to get boost in 2025

13/12/24

Argentina’s renewables to get boost in 2025

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Norway's 500MW cables at risk if price link proved

13/12/24

Norway's 500MW cables at risk if price link proved

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US rail group optimistic about 2025 rail demand

12/12/24

US rail group optimistic about 2025 rail demand

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